The Iowa Court of Appeals has issued its first ruling on three-year-old revisions to the state's mechanic's lien law that established a registry of contractors, subcontractors and materials suppliers on residential projects.

In this case, the court ruled that contractors do not need to file notice that they are about to start work on a project or carry out other pre-lien activities before filing a mechanic's lien when they do not receive payment, provided they do not hire subcontractors to perform the work.

Appeals court judges ruled Aug. 31 that revisions to the law were intended to provide the names of subcontractors that might not be known to property owners. Judges reasoned that a contractor that performs the work it was hired to do already is known to the owner. The ruling can be appealed to the Iowa Supreme Court.

In 2012, when the law was debated, the housing collapse was fresh in the minds of bankers, real estate agents, contractors, subcontractors and suppliers. Real estate agents wanted to make sure they were selling homes that were free from liens filed by subcontractors who were waiting to get paid for work on the homes. Bankers wanted to make sure they were writing mortgages on properties that had a clear title. Many contractors, subcontractors and suppliers just wanted someone to pay them for their work.

Within weeks of the collapse of Regency Homes in 2008, contractors filed liens claiming they were owed more than $1 million for work they had performed for what was the state's largest homebuilder. Those claims were for work performed in Polk County.

The recourse in the residential construction industry was to file a lien and possibly gain title to the property. Revisions to the law were meant to clear the confusion by establishing an online registry where construction companies would file notice that they were about to start work on a project.

A provision of the law was challenged in 2014 in Polk County District Court, where homeowners claimed they did not owe the balance of a bill for waterproofing their basement because the contractor did not file a pre-lien notice that it was about to start work.

The homeowners had prevented Minnesota-based Standard Water Control Systems Inc. from completing the work after workers damaged concealed water and sewer lines. The workers did not know where the lines were located.

Standard Water Control Systems filed a mechanic's lien, claiming the homeowners owed the company about $5,400, plus attorneys fees. The company, represented by Jodie McDougal and Elizabeth Meyer of the Davis Brown Law Firm and Bradley Beaman of Bradshaw, Fowler, Proctor & Fairgrave P.C., responded that the law only required the filing of the pre-lien notice if the work was performed by a subcontractor.

Polk County District Judge Lawrence MClellan sided with the company, as did the Iowa Court of Appeals after the homeowners, represented by John Fatino of Whitfield & Eddy P.L.C., challenged the lower-court ruling. McDougal said the message to the homeowners from the appeals court was that "you know who you hired," so there was no need for the company to file notice that it was about to commence work.

Though the ruling is a victory for the residential construction industry on the first challenge to the law, McDougal anticipates some pushback. The ruling can be appealed to the Iowa Supreme Court. In addition, opponents could seek changes in the Iowa Legislature.

Fatino could not be reached for comment.

The case has been returned to the trial court for reconsideration of its award of $43,000 in attorneys' fees.